Research from Alibaba reveals businesses embracing exports to overcome domestic pressures, but supply chain, red tape and cultural challenges continue to hold small businesses back
European businesses surveyed are going global to unlock growth opportunities, with 80% of businesses currently exporting and 70% expecting their exports1 to grow next year.
These are just some of the findings from Alibaba Group’s Export Opportunity Report, in which over 9,000 European businesses across nine markets were surveyed.*
The report shows buoyant export activity, with 79% of companies saying exporting has made their businesses stronger2 and the same proportion saying international sales are critical for their future success. On average, the business owners surveyed said 52% of their annual revenue was derived from exports in the past year.
Benefits beyond economic impact
In addition to the direct benefits of international trade, the survey also reveals that exporting delivers a wide range of additional benefits, with 80% of respondents saying it has fuelled innovation in their business and enhanced their production capabilities2. The same proportion say it has increased their headcount and encouraged them to broaden their product range.
SMEs lagging behind
Despite these advantages, the report shows that SMEs are lagging behind larger businesses when it comes to seizing the benefits of exporting. Currently 23% of SMEs3 do not export at all, showing untapped potential for export growth among Europe’s smaller companies.
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Protection against domestic uncertainties
At a time of economic uncertainty and rising costs, the report reveals how exports protect European businesses by helping them diversify and access new opportunities. In particular, firms say exports provide protection against potential problems in their home market, with almost four in five (79%) saying exporting had relieved pressures at home2.
“This report underscores the vital importance for small businesses of having an export strategy and a digital strategy. Both are essential for businesses to support long-term, sustainable growth,” says Michael Evans, Director and President of Alibaba Group, which enables thousands of European businesses to export globally by leveraging its technology and commerce infrastructure.
“These findings reveal that businesses that export are more resilient, innovative, can attract and retain top talent and, critically, they are achieving growth in the currently challenging business climate.”
Barriers to export
Despite the clear benefits of exporting, there remain hurdles to businesses, particularly SMEs, trading internationally. Supply chain and logistics challenges are cited as the biggest barriers to export (20%), followed by a lack of cultural awareness/familiarity with overseas markets (19%), increased paperwork and red tape (18%), price competition (18%) and inadequacies in production capacity (18%). Difficulties in finding a trusted export partner also ranked high on the list of barriers to international trade (18%).
Businesses in the UK and France list supply chain and logistics challenges as their biggest barriers to export (22%), while German companies ranked lack of cultural awareness/familiarity with the overseas market as the biggest barrier (22%). For businesses in Sweden, increased paperwork and red tape was the main issue to exporting (22%).
Over a quarter of respondents (28%) export to other countries in the EU, 21% to North America and 19% to China. Belgium and Denmark have the highest proportion of businesses that export (90%), with Germany (73%) and the Netherlands (70%) lower, but still a high proportion.
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Digitalisation and online marketplaces boost exports
Digitalisation and online marketplaces are seen by businesses as a key way to expand into new markets, especially since the pandemic. Overall, some 61% of businesses are currently working with online marketplaces to boost exports. Around a quarter (25%) of the businesses surveyed started working with online marketplaces during the pandemic, with the highest proportion in Belgium (38%) and the UK (30%). Overall, 80% of businesses agree2 that exporting has driven their digital transformation, and 76% agree2 that digital transformation has accelerated their business since the pandemic.
Nearly a third (30%) of businesses working with online marketplaces say they have enabled them to expand into new geographic markets, with improved inventory planning (29%), better access to technology and communication tools (29%), and enhanced competitor and market insights (29%).
Of the companies that have digitalised, 76% say it has helped make their business more efficient and reduced costs2. Companies also say investments in digital processes have yielded insights that have increased the quality of products and/or customer service2 (77%). Digital tools commonly used are social media (16%), smart marketing (14%), digital advertising (13%), data analytics (14%) and digital custom clearance (12%).
Overall, the report shows that European businesses are embracing the opportunities and benefits of exporting. Although there are still many perceived barriers to exporting – particularly among smaller companies – it is clear that digitalisation and online marketplaces can help overcome these challenges and enable businesses to sell their goods abroad. By doing so, companies have more potential to grow, innovate and protect themselves from pressures in their domestic markets.